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T's owner wears wire, gets new audits
by Kate Sosin, Windy City Times

This article shared 7476 times since Wed Oct 10, 2012
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The auditor asked him to lunch. That was the first sign that something was off.

The year was 2007, and Colm Treacy, owner of popular LGBT hangout T's Restaurant, was closing out his second successful year with his newer business, Sofo Bar (Treacy has since sold Sofo and is not affiliated with The Sofo Tap, at that same location, in any way.)

Sofo had been randomly selected for a state audit but instead of telling him how much he owed, the auditor promised that if he slipped cash into an envelope and tossed it into an open car window across the street, he would never have another problem again.

Months later, Treacy would participate in an FBI anti-bribery sting on the auditor.

Today, Treacy is facing his third Illinois Department of Revenue audit in five years (this one of T's Restaurant), more than $100,000 in fines and the threat of closure by Oct. 16, according to Treacy.

The story according to Treacy

Treacy said he first met the auditor in spring 2007. Rather than talking at Sofo, the man suggested they get lunch in the neighborhood. Over lunch, the auditor broke the news to Treacy that it appeared he could owe a lot of money, but he declined to say how much. The auditor talked at length about other businesses, small ones like Treacy's that had been ruined by fines owed after audits.

"He was wishy-washy and wouldn't give me a specific number," said Treacy.

What he did give Treacy was an out.

Treacy could slip a few thousand dollars into an envelope. (Treacy said the sum was either $3,000 or $5,000, but he cannot recall which.)

"He was very schmoozy," said Treacy. "He was like, 'Either way, pal, we're not going to have a problem.' ... He made it seem like he had all the power."

Treacy could walk across the street to the lot where the auditor's car had been backed in against a wall and toss the envelope into the back seat of the car.

"I happened to have [the money] in the safe at the bar," said Treacy.

He did as he had been told.

As he went to walk away, it occurred to him that he should note the auditor's license plate number, but then he saw that the front plate was missing.

An entire summer went by before Treacy heard again from the auditor, he said. The man wanted to meet to sign off on the audit papers. Fearing that the man would ask for money and that he was digging himself into a bad situation, Treacy contacted the Illinois Attorney General's office, who contacted the Federal Bureau of Investigation.

The FBI asked Treacy to participate in a sting, Treacy said. His goal would be to get the auditor to acknowledge taking bribes while Treacy was wearing a wire.

A few days before the meeting with auditor, agents came to Sofo to scope out the bar for places to install cameras and they met with Treacy give him an idea of how it would go.

The day of the meeting, agents wired Treacy and gave him a coat that Treacy believes contained a second audio recorder and camera. A group of agents listened from Treacy's house nearby, and two undercover officers waited outside Sofo.

"I was told to the open the door, make sure he walked in first and pretend to lock the door, just in case something went wrong," Treacy said.

In the event that Treacy felt his safety was in danger, he could say the code phrase, "It's my birthday," and agents would come into the building.

Treacy was told to do exactly the same things he had done at the first meeting.

When the auditor arrived at Sofo, Treacy pretended to lock the door behind them. The two sat down.

"He told me to take off my coat, and that made me nervous because I thought he was onto me straight away," Treacy said.

"My job was to get him to admit to, did I give him cash? That was my job," Treacy said. "I was left with the impression that there was certainly going to be no backlash from this, that everything was going to be okay. Certainly, my money wasn't going to be returned. I knew that."

The auditor began to talk about money Treacy owed.

"I started to say, 'but you told me when I gave money.' And he goes, 'What money? I know nothing of any money.'"

A few minutes later, the man asked for some paperwork. Treacy went downstairs to his office to get it. When he looked up from his desk drawer a few moments later, he saw the auditor standing right over him.

"It scared me at that point," Treacy recalled. He almost said, "It's my birthday," but hesitated.

The man suggested they take a drive in his car.

In the auditor's car, Treacy was not sure if FBI agents could hear them talking over the wire anymore. The further they got from Sofo, the more nervous Treacy became. The auditor drove them to lunch at the restaurant they had been to before and Treacy ordered the same thing he had the first time.

Toward the end of the meal, the auditor commented to Treacy that he didn't shake down large companies, just smaller ones without attorneys. It was the statement the FBI needed, said Treacy.

Finally, the auditor drove them back to Sofo where Treacy signed paperwork. The auditor left.

"They assured me this was just going to be a piece of cake," Treacy said. "Well since then, it hasn't been a piece of cake."

A few months later, someone from the FBI called Treacy and told him they had used the recording in proceedings against the auditor and that the auditor had recognized his voice. It was not difficult. Treacy grew up in Ireland and has an accent. The person added that if he ever saw the auditor again, to immediately call 911.

"Shortly after that, I received in the mail an audit for T's," Treacy said.

T's Restaurant was Treacy's other business, the popular Andersonville gay bar/eatery just steps away from Sofo. While Treacy has expanded in the years since he opened T's in 2001, T's has always been his home base.

Treacy was suspicious of the audit. FBI agents had told him that his story would not be shared within the Illinois Department of Revenue, but an audit of T's so soon after the sting set him on edge.

A few months after the audit notice, Treacy went to the Department of Revenue to renew his liquor license for T's.

"The person was extremely rude to me," Treacy said. "He said you're the one that had the issue with Sofo … . I was told to my face that I was a troublemaker."

Treacy called his contact at the FBI. The contact assured Treacy that his story had not been shared and that the Department of Revenue confirmed the audit on T's was random.

After a yearlong audit process, in 2009, Treacy received notice that he owed more than $100,000 in taxes and fines. His accountant was boggled, Treacy said.

Treacy wrote a check for $78,000 a few days later.

Displeased with his accounting firm, Treacy hired a new accountant and asked him to look into the balance he still owed from the audit. The accountant reported back that he could not find any record of the money owed. Treacy went himself to the department and was told he owed no money. No record of the original taxes and fines appeared to exist, he said.

Over the next few years, odd things happened at T's and Sofo. Treacy's tires were slashed and the windows of both bars were broken several times. T's had two break-ins. From 2010-2011, the phone at T's often rang ceaselessly late at night, with no one responding on the other line when Treacy picked up. Treacy said the incidents could have been coincidental.

On July 25 of this year, Treacy received a bill from the Department of Revenue for overdue taxes owed since 2009 plus fines that had accrued in that time. The bill appeared to be the same one that vanished three years prior, the one that Treacy alleges he had already paid $78,000 on. Now, the charges totaled $113,743.

Treacy called the Department of Revenue.

"I tell this lady pretty much my story because I'm in a panic," he said. "She was just really rude."

If he didn't pay a third of the bill, she told him, his liquor license would be revoked by Oct. 16.

"Within a few days, I get certified mail that I'm being re-audited," Treacy said. "Now I feel like I'm being really harassed."

Treacy cannot immediately pay the amount he needs to keep his liquor license, he said.

When he got word of his latest audit, he contacted the Illinois Attorney General's office and spoke with someone familiar with his story. But he said no one from that office has followed up with him.

Consequently, T's could be facing closure Oct. 16, according to Treacy.

Out of options, he said, he reluctantly decided to go public with his story.

Beyond Treacy's story

Treacy's version of events is hard to confirm. He does not have documentation from the first two audits, which were never fully settled, nor does he have record of the FBI sting.

Treacy did provide Windy City Times with documentation of his most recent audit and a copy of his bill with fines dating back to the 2008-2009 audit.

Natalie Bauer, a spokesperson for the Illinois attorney general's office, said she cannot comment on individual investigations, including whether her office worked with Treacy on the bribery allegations.

Further confusing matters is Treacy's inability to recall the name of the auditor in question. A search of local media outlets did not yield information about charges filed against a Department of Revenue auditor from 2007-2009. The Cook County state's attorney's office is unable to search for the case without the auditor's name, a spokesperson said.

Joan Hyde, a spokesperson for the FBI, said she is also unable to comment on investigations but said that—unlike Treacy's assertion that the FBI promised to keep his identity secret—the FBI rarely makes promises to conceal identity.

"It's rare that we maintain someone's confidentiality forever," Hyde said, adding that in instances where someone's safety is a threat the FBI does try to protect identity.

Asked about Treacy's allegations, Greg Rivara, a spokesperson for the Illinois Department of Revenue, said that the department cannot comment on Treacy's situation due to confidentiality rules.

"However, the department is aware of Mr. Treacy's concerns and has called him multiple times to discuss," he said. "Mr. Treacy has not responded to messages left for him."

Treacy said he has been in touch with the department regarding the audits and that his attorney, Sean Mulroney, is also following up.

Mulroney said he is considering legal options for stalling proceedings against T's Restaurant and Treacy.

He questions why, if Treacy has owed more than $100,000 in back taxes and fines from 2009, he has been able to renew his liquor license the past three years without having to go on a payment plan.

"It's an attempt to put a guy out of business," said Mulroney.

This article shared 7476 times since Wed Oct 10, 2012
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